Preparing for Long Term Care Expenses

Presented by:

Larry S. HartleyBoard Certified Specialist in Elder Law

by the North Carolina State Bar

Certified Elder Law Attorney

By the National Elder Law Foundation

Founder: Andrew A. Strauss, Board Certified Specialist in Estate Planning and Probate Law by the NC State Bar

Strauss & Associates, P.A.77 Central Avenue Suite F

Asheville, NC 28801(828) 258-0994

Larry S. Hartley

• Associated with the law firm of Strauss & Associates, P.A., with offices in Asheville, NC and Hendersonville NC.

• Member of NAELA, the National Academy of Elder Law Attorneys

• Certified Elder Law Attorney by the National Elder Law Foundation and Board Certified Specialist in Elder Law by the NC State Bar

• Admitted of the NC State Bar in 1996

• Wartime veterans

• Surviving spouses of wartime veterans

The key is to qualify!

There Is Money Available For:

Extra Money for Veterans and Spouses

Wartime veterans with spouses may be eligible for up to $2,054/month

A surviving spouse may be eligible for up to $1,113/month.

• Served at least 90 days (if before 1980) of actual duty

• Served at least 2 years 1980 and after

• Served at least one day during a war period during active duty

• Other than dishonorable discharge

Service RequirementsService Requirements

U. S. WAR PERIODS

• World War I - April 6, 1917- November 11, 1918

• World War II – Dec. 7, 1941 – Dec. 31, 1946

• Korean War – June 27, 1950 – Jan. 31, 1955

• Vietnam Conflict – Aug. 5, 1964 – May 7, 1975 (Feb. 28, 1961 – May 7, 1975 if in the country of Vietnam)

• Gulf War – Aug. 2, 1990 – date to be set by law by Presidential Proclamation

Additional Benefits

FREE VA medical (no co-pay) and FREE prescription through VA pharmacies for

formulary drugs

Limits On Net Worth

•Approximately $80,000 for a couple

•Approximately $50,000 for a single Veteran or surviving spouse

•This is where the greatest need for planning exists.

Assets VA Does Not Count

• Residence

• Burial Policies/plans

• Small life insurance policies

• Personal property

• Yes Medicaid can pay the catastrophic cost of a long term stay in a nursing home.

• No, you do not have to spend your family’s whole inheritance on the nursing home first.

• It is a myth that you must spend all of your own money on the cost of a long term nursing home stay before you can qualify for Medicaid benefits.

Say Yes to Medicaid Eligibility

How can these costs be paid?• Medicare: Only pays up to 100 days, and must

first be hospitalized for at least 3 days. Also upon entry to nursing home they must be improving (or the rehab must at least prevent the patient from getting worse). Note: There has been recent litigation that may

end the need for improvements

• Private Pay: Use your own funds

• Long Term Care Insurance: This is an under-used method, but some people can’t get it.

• Medicaid: Many people end up on Medicaid, like it or not.

Exempt Assets (a partial list)

• The homesite (the principal residence): If the patient has an intent to return home, or if there is a community spouse or dependent relative in the home.

• For a single person this is limited to equity of up to $536,000 as of January 1, 2013

• Life estates in the primary residence

• Tenancy-in-common ownership in real property (actually just non-available)

More Exempt Assets

• One licensed motor vehicle. (no limit on value)

• Personal effects and household goods including jewelry, furniture, appliances, artwork and other decorative items.

More Exempt Assets

• Life insurance cash values if the total face amount of all policies is $10,000 or less. This is a NC rule; most other states are limited to $1,500 face value of all policies.

• Prepaid funeral contract if it is irrevocable.

• Or up to $1,500 burial funds if no irrevocable funeral contract.

What is Estate Recovery?

• Estate Recovery is the next big concern for the family of a person receiving Medicaid benefits for long term care expenses.

• Estate recovery is the government efforts to recover its payments for long term care from your assets after your death.

Medicaid Qualified Annuities• Must be immediate annuities

• Must be irrevocable

• Must be non-assignable and non-sellable

• Must be actuarially sound

• Must be substantially equal payments (no balloon payments)

• Annuitant must not be terminally ill

• The state should be named as a contingent beneficiary to avoid penalties

Irrevocable Trusts: The Secret Weapon of Medicaid Planning

• These work best with time to spare.

• Irrevocable means grantor can not change it.

• Grantor can retain income rights.

• Grantor must relinquish rights to principal.

• Can be structured to avoid or at least delay gift taxes.

THANK YOU